Question 1

The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is

Accepted Answer

A)  debit Interest Expense, credit Cash and Discount on Bonds Payable 
B)  debit Interest Expense, credit Cash 
C)  debit Interest Expense and Discount on Bonds Payable, credit Cash 
D)  debit Interest Expense, credit Interest Payable and Discount on Bonds Payable 
A)  debit Interest Expense, credit Cash and Discount on Bonds Payable 
B)  debit Interest Expense, credit Cash 
C)  debit Interest Expense and Discount on Bonds Payable, credit Cash 
D)  debit Interest Expense, credit Interest Payable and Discount on Bonds Payable

Question 2

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

Accepted Answer

A)  trading on the equity. 
B)  convertible bond. 
C)  a bond debenture. 
D)  a bond certificate. 
A)  trading on the equity. 
B)  convertible bond. 
C)  a bond debenture. 
D)  a bond certificate.

Question 3

On the first day of the fiscal year, a company issues a $500,000, 8%, 10 year bond that pays semi-annual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 4

On January 1, 2010 Orange Retail Co. issued a $300,000, 3 year, 6% installment note payable with payments of $100,000 principal and interest due on January 1st for each of the next 3 years.
1. Prepare the adjusting journal entry to accrue interest at the end of the 2nd year - 12/31/11.
2. Show the account(s) and amount (s) and where the account(s) will appear on a multi-step income statement prepared on December 31, 2011.
3. Show the account(s) and amount(s) and where the account(s) will appear on a classified balance sheet prepared on December 31, 2011.

Accepted Answer

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Question 5

The Merchant Company issued 10-year bonds on January 1, 2011. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective-interest method to amortize bond discounts and premiums. On July 1, 2011, Merchant should record interest expense (round to the nearest dollar) of

Accepted Answer

A)  $7,032 
B)  $7,500 
C)  $8,790 
D)  $14,065 
A)  $7,032 
B)  $7,500 
C)  $8,790 
D)  $14,065

Question 6

Using the following table, what is the present value of $25,000 to be received 5 years, if the market rate is 7% compounded annually?

Accepted Answer

X = $25,00

Question 7

Both callable and non-callable bonds can be purchased by the issuing corporation in the open market.

Accepted Answer

A) True 
 B)False

Question 8

(a)  Prepare the journal entry to issue $100,000 bonds which sold for $94,000.
(b)  Prepare the journal entry to issue $100,000 bonds which sold for $104,000.

Accepted Answer

(a) Cash 94,000
Discount on Bo

Question 9

Balance sheet and income statement data indicate the following:   Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)?

Accepted Answer

A)  5.72 
B)  6.83 
C)  4.72 
D)  4.83 
A)  5.72 
B)  6.83 
C)  4.72 
D)  4.83

Question 10

An installment note is a debt that requires the borrower to make equal periodic payments to the lender for the term of the note.

Accepted Answer

A) True 
 B)False

Question 11

Match between columns
                        Premises:  the principal of the bond is paid back in installments
 allows the issuer to redeem bonds before maturity date
 the value of a bond stated on the bond certificate
 a bond issued without any collateral or security
 the entire principal of the bond is paid back on maturity date
 allows the bond hold to exchange bond for shares of stock
 the legal contract between issuer and bond holder

Accepted Answer

The Answer of Debenture and Term bond and Face value is...

Question 12

Balance sheet and income statement data indicate the following:

Accepted Answer

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Question 13

A secured bond is called a debenture bond and is backed only by the general creditworthiness of the corporation.

Accepted Answer

A) True 
 B)False

Question 14

If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is

Accepted Answer

A)  $1,080,000 
B)  $965,000 
C)  $1,000,000 
D)  $1,035,000 
A)  $1,080,000 
B)  $965,000 
C)  $1,000,000 
D)  $1,035,000

Question 15

Which of the following is not an advantage of issuing bonds instead of common stock?

Accepted Answer

A)  Tax savings result 
B)  Income to common shareholders may increase. 
C)  Earnings per share on common stock may be lower. 
D)  Stockholder control is not affected. 
A)  Tax savings result 
B)  Income to common shareholders may increase. 
C)  Earnings per share on common stock may be lower. 
D)  Stockholder control is not affected.

Question 16

The interest expense recorded on an interest payment date is increased

Accepted Answer

A)  only if the market rate of interest is less than the stated rate of interest on that date. 
B)  by the amortization of premium on bonds payable. 
C)  by the amortization of discount on bonds payable. 
D)  only if the bonds were sold at face value. 
A)  only if the market rate of interest is less than the stated rate of interest on that date. 
B)  by the amortization of premium on bonds payable. 
C)  by the amortization of discount on bonds payable. 
D)  only if the bonds were sold at face value.

Question 17

The Designer Company issued 10-year bonds on January 1, 2011. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1. The bonds were sold for $690,960 based on the market interest rate of 8%. Designer uses the effective-interest method to amortize bond discounts and premiums. On July 1, 2011, Designer should record interest expense (round to the nearest dollar) of

Accepted Answer

A)  $27,638 
B)  $24,000 
C)  $48,000 
D)  $55,277 
A)  $27,638 
B)  $24,000 
C)  $48,000 
D)  $55,277

Question 18

Given the following data, determine the times interest earned ratio.
Net income - $70,000
Bonds Payable (issued at face value), 8% - $5,000,000
Preferred Stock ($50 par value, 6%, 10,000 shares issued & outstanding)
Tax rate - 30%

Accepted Answer

The answer of Given the following data, determine the times...

Question 19

If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $250,000 will be

Accepted Answer

A)  Equal to $250,000 
B)  Greater than $250,000 
C)  Less than $250,000 
D)  Greater than or less than $250,000, depending on the maturity date of the bonds 
A)  Equal to $250,000 
B)  Greater than $250,000 
C)  Less than $250,000 
D)  Greater than or less than $250,000, depending on the maturity date of the bonds

Question 20

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Accepted Answer

A) True 
 B)False

The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

On the first day of the fiscal year, a company issues a $500,000, 8%, 10 year bond that pays semi-annual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Using the following table, what is the present value of $25,000 to be received 5 years, if the market rate is 7% compounded annually?

Both callable and non-callable bonds can be purchased by the issuing corporation in the open market.

(a) Prepare the journal entry to issue $100,000 bonds which sold for $94,000. (b) Prepare the journal entry to issue $100,000 bonds which sold for $104,000.

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)?

An installment note is a debt that requires the borrower to make equal periodic payments to the lender for the term of the note.

Balance sheet and income statement data indicate the following:

A secured bond is called a debenture bond and is backed only by the general creditworthiness of the corporation.

If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is

Which of the following is not an advantage of issuing bonds instead of common stock?

The interest expense recorded on an interest payment date is increased

Given the following data, determine the times interest earned ratio. Net income - $70,000 Bonds Payable (issued at face value), 8% - $5,000,000 Preferred Stock ($50 par value, 6%, 10,000 shares issued & outstanding) Tax rate - 30%

If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $250,000 will be

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

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Exam 14: Long-Term Liabilities: Bonds and Notes

The journal entry a company records for the payment of interest, interest expense, and amortization of bond discount is

A legal document that indicates the name of the issuer, the face value of the bond and such other data is called

On the first day of the fiscal year, a company issues a $500,000, 8%, 10 year bond that pays semi-annual interest of $20,000 ($500,000 × 8% × 1/2), receiving cash of $530,000. Journalize the entry to record the issuance of the bonds.

Using the following table, what is the present value of $25,000 to be received 5 years, if the market rate is 7% compounded annually?

Both callable and non-callable bonds can be purchased by the issuing corporation in the open market.

(a) Prepare the journal entry to issue $100,000 bonds which sold for $94,000. (b) Prepare the journal entry to issue $100,000 bonds which sold for $104,000.

Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to two decimal places)?

An installment note is a debt that requires the borrower to make equal periodic payments to the lender for the term of the note.

Balance sheet and income statement data indicate the following:

A secured bond is called a debenture bond and is backed only by the general creditworthiness of the corporation.

If $1,000,000 of 8% bonds are issued at 103 1/2, the amount of cash received from the sale is

Which of the following is not an advantage of issuing bonds instead of common stock?

The interest expense recorded on an interest payment date is increased

Given the following data, determine the times interest earned ratio. Net income - $70,000 Bonds Payable (issued at face value), 8% - $5,000,000 Preferred Stock ($50 par value, 6%, 10,000 shares issued & outstanding) Tax rate - 30%

If the market rate of interest is 8%, the price of 6% bonds paying interest semiannually with a face value of $250,000 will be

The balance in Premium on Bonds Payable should be reported as a deduction from Bonds Payable on the balance sheet.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters